he Operating Cycle and The Cash Cycle: Consider selected information (in US$) from a firm's balance sheet for two consecutive years (i.e. start and end of 2016).

12/31/2015

12/31/2016

Inventory

200,000

300,000

Accounts Receivable

160,000

200,000

Accounts Payable

75,000

100,000

Further, we know that the firm's Net Sales for the year is $1,150,000, and its Cost of Goods Sold (COGS) is $820,000.

a. Using the average of the Inventory for the two years, calculate the Inventory Period (in days).

1.42 points

Question 4

1. 2.b. Using the average of the Accounts Receivable for the two years, calculate the Receivables Period (in days).

1.42 points

Question 5

1. 2.c. Now, using your answers in parts a and b above, compute the number of days between purchasing the inventory and collecting cash on the sale (i.e. Operating Cycle).

1.44 points

Question 6

1. 2. d. Using the average of the Accounts Payable for the two years, calculate the payables period (in days).

1.42 points

Question 7

1. 2.e. Now, using your answers to parts c and d above, compute the number of days we need to finance our inventory (i.e. Cash Cycle).

1.46 points

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